The Global Battery Race Heats Up as China Tightens Its Grip

By Haley Zaremba - Feb 11, 2026

• China produces more than 80 percent of the world’s battery cells and has poured massive investment into energy storage, positioning itself as the dominant electro-state.
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• Canada’s NEO Battery Materials has unveiled a drone battery with significantly higher capacity and energy density than widely used Chinese models, signaling potential competitive disruption.
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• Despite technological breakthroughs, building globally competitive battery industries outside Asia will require coordinated policy, supply chain development, and large-scale industrial investment.

The global clean energy transition hinges on the continued advancement and integration of energy storage, and especially utility-scale and long-term models. As the world adds renewable energy capacity at a breakneck pace, keeping up with supportive infrastructure additions is integral to maintaining energy security. While solar panels and wind turbines get all the attention, power lines and battery packs are just as critical, if far less glamorous. 

In fact, energy storage is quickly heating up to be “clean energy’s next trillion-dollar business.” Researchers around the world are racing to discover next-gen battery tech that will put them at the vanguard of this massive emerging sector. So far, China is dominating the sector, having surpassed its own ambitious energy storage capacity goals years ahead of schedule. 

China is also leading the pack in terms of battery making in general. In an increasingly electrified world, this gives Beijing a critical geopolitical edge in virtually every corner of the energy and tech sectors. In 2024, more than 8 in 10 battery cells on the planet were made in China. “After decades of quiet growth, firms such as CATL, BYD, Gotion High-Tech, and Envision are now primary suppliers for the world’s EVs and energy grids,” a Wired report writes about China’s leading battery manufacturers.

The World Economic Forum reports that China’s energy storage sector is evolving into a ‘new driving force’ in the country’s otherwise plateaued economy. As of the January 2025 report, the sector had drawn in more than 100 billion yuan (about $13.9 billion) in investment since 2021 alone, “driving further expansion of upstream and downstream industrial chains.”

China has blown the rest of the competition away in terms of overall clean energy spending, not just in terms of energy storage and EVs. In 2023, China alone spent more on clean energy than the next 10 largest spenders combined. As a result of this spending and of a years-long campaign to become the world’s first and overwhelmingly dominant electro-state, China controls the market for many of the most promising energy storage technologies and other next-gen batteries, and is also the cheapest place to produce them. 

But a new battery breakthrough in Canada may just give China a run for its money. Toronto’s NEO Battery Materials has announced that its drone batteries have achieved a game-changing 50 percent capacity improvement, in addition to a 40 percent increase in energy density, making them more powerful than the market standard set by Chinese firms. Critically, the Canadian company achieved this breakthrough without changing the size of the battery. 

According to a press release from NEO, “the newly developed NBM Drone Cell, intended for reconnaissance and surveillance applications, achieves an average discharge capacity of 34.2 amp-hours (Ah) and energy density of approximately 300 watt-hours-per-kilogram (Wh/kg), compared to 22.0 Ah and 214 Wh/kg in widely deployed commercial drone cells manufactured in China.”

As such, the company claims that its breakthrough is key to “addressing critical supply chain concentration and security concerns.” NEO is currently negotiating deals with potential military customers, including the South Korean government, "and is rolling out products for automotive customers, too,” according to a recent report from Semafor.

While the applications of this particular battery type may be narrow, it bodes well for a more diverse and resilient energy storage sector overall. Indeed, localizing battery supply chains is one of the most critical priorities for the future of the battery industry. And governments around the world have made new policies to try to achieve these goals.

“But for globally competitive battery manufacturing industries to emerge outside of Asia over the next ten years, companies will need to do far more than ensure regulatory compliance,” summarizes a January McKinsey & Company report. “Challenges will need to be overcome on multiple fronts spanning supply chains, talent management, operations and technology.”

All of this is to say, while individual breakthroughs like NEO’s battery performance are critical baby steps toward leveling the playing field, they are just that – baby steps. A much greater and more coordinated effort is needed to create a healthier and more sustainable energy and tech economy. 

By Haley Zaremba for Oilprice.com